Uncovering potential barriers of using initial coin offerings to finance artistic projects

Abstract

Artists make vital contributions to our society and lay the foundations for billion-dollar industries. However, these artists consistently struggle to acquire sufficient funding for their projects and their livelihood. New technology-supported possibilities for funding artists and their projects have emerged in recent years. Initial Coin Offering (ICO) is a novel form of reward-based tokenized crowdfunding. Although ICOs are promising as a way to fund artistic projects, they lack widespread adoption in the creative and cultural industry (CCI). Based on 35 qualitative in-depth interviews, we identify four barriers that hinder the funding of artistic projects through ICOs: legal shortcomings, investment restrictions, lack of consumer interest, and intermediaries’ resistance. Our research contributes to cultural finance and funding literature by disclosing barriers that impede a promising form of financing artistic projects. Further, we outline possible solutions to overcome them. We also contribute to the research about ICOs by showing that rather than reducing investment risks, these offerings merely shift them.